Space Problems
- Needing New Space?
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Often times a tenant will need to relocate their company because they need more space or they may just want to upgrade their image. The problem is they don't know how to locate suitable buildings that meet all of their needs.
Your tenant representation agent not only has access to vast amounts of market data to share, based on your specific requirements, he has the expertise to quickly narrow the inventory down to a few buildings saving you time and money.
- What do I do if I have to much or too little space?
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Flexibility in the amount of space utilized should be a key focus of negotiations. Provisions like expansion, rights of first refusal, contraction and cancellation options are a few of the measures your agent will negotiate into the lease.
Additionally, your agent will remain in constant communication with you during the term of the lease to see if your space needs change. If so, the operative provisions of the lease can be used to expand or contract your space. Your agent can seek additional space from the landlord or other building tenants if you need to expand. If you should find that you have unused space, your agent can offer the unneeded space for sublease.
- I'm not interested in moving. How can I know I am getting a good deal that is consistent with market conditions if I renew my current lease?
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Your best bet is to hire a tenant representative agent. They can check the market to ensure the proposed terms in your current lease are competitive and review your current lease to see if any provisions need to be changed to reflect current market or regulatory conditions.
Of course, if the landlord is not competitive, they can find alternative locations that offer more favorable terms and conditions.
- I don't understand my invoices. What is an operating expense pass through or escalation?
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Expense pass throughs or escalations are building operating costs the tenant must pay in addition to monthly rent because they exceed a "base year" operating expense factor.
Typically, when a rental rate is determined, it will include a component that represents the operating expenses during that base year. In subsequent years following the base year, if operating expenses exceed the base year operating expense factor used in determining the rent, the tenant pays a proportionate share of such increase.
These expenses are typically invoiced monthly, based on an estimate of operating expenses for the year, and reconciled during the following year after the actual operating expenses for the year in question are known.
This practice was developed in an effort to protect the landlord from inflation, since the landlord was fixing a rental rate over a long period of time and could not guarantee that operating expenses would not go up due to inflation or other operating issues.
A well-negotiated lease will provide the tenant with safeguards against abuse by the landlord. These safeguards might include a list of expenses that cannot be included in operating expenses, and also might subject the landlord to a test that operating expenses be in compliance with industry and market practices.
At Moody Rambin we have representatives who understand the owner's perspective and can determine if you have been overcharged for operating expenses and typically at no charge to you
